June 2016
Hikal Limited
Investor Presentation
Safe Harbor
This presentation and the accompanying slides (the “Presentation”), which have been prepared by Hikal Limited (the“Company”), have been prepared solely for information purposes and do not constitute any offer, recommendation orinvitation to purchase or subscribe for any securities, and shall not form the basis or be relied on in connection with anycontract or binding commitment whatsoever. No offering of securities of the Company will be made except by means of astatutory offering document containing detailed information about the Company.
This Presentation has been prepared by the Company based on information and data which the Company considers reliable,but the Company makes no representation or warranty, express or implied, whatsoever, and no reliance shall be placed on,the truth, accuracy, completeness, fairness and reasonableness of the contents of this Presentation. This Presentation maynot be all inclusive and may not contain all of the information that you may consider material. Any liability in respect of thecontents of, or any omission from, this Presentation is expressly excluded.
Certain matters discussed in this Presentation may contain statements regarding the Company’s market opportunity andbusiness prospects that are individually and collectively forward-looking statements. Such forward-looking statements arenot guarantees of future performance and are subject to known and unknown risks, uncertainties and assumptions that aredifficult to predict. These risks and uncertainties include, but are not limited to, the performance of the Indian economy andof the economies of various international markets, the performance of the paper industry in India and world-wide,competition, the company’s ability to successfully implement its strategy, the Company’s future levels of growth andexpansion, technological implementation, changes and advancements, changes in revenue, income or cash flows, theCompany’s market preferences and its exposure to market risks, as well as other risks. The Company’s actual results, levelsof activity, performance or achievements could differ materially and adversely from results expressed in or implied by thisPresentation. The Company assumes no obligation to update any forward-looking information contained in thisPresentation. Any forward-looking statements and projections made by third parties included in this Presentation are notadopted by the Company and the Company is not responsible for such third party statements and projections.
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Company Overview
Amongst the few Global Company to offer customized, cost effective and sustainable solutions from R&D to Commercial Manufacturing
One of very few global and only Indian Company to provide APIs for both Pharmaceuticals and Agrochemicals – Hybrid Model
Preferred Supplier to Large Global Customers across the Regulated Markets
First Responsible Care custom manufacturing Life Science Company in India
First Indian Company to be member of Rx - 360, a global pharmaceutical supply chain consortium for upholding world class quality standards
Leading Sustainable Technology driven company serving the Crop Protection &
Pharmaceutical Industries
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Hybrid Business Model
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• Contract & Custom Manufacturing
• Generics• Human Health• Animal Health• Strong Relationships with
Innovators, Mid size Pharma, Biotech & Generic Companies
1 Pharmaceuticals
• Offers Right Combination of Capabilities, Quality combined with significant Cost Arbitrage
• Full development & Scale up Service to Innovator Companies , Generic & Biotech Companies
3 Research & Development
• Custom Synthesis and Contract Manufacturing of Agrochemicals, Intermediates, Biocides and Specialty Chemicals
• Preferred Supplier to Top Crop Protection Companies
2 Crop Protection
Pharmaceuticals
Research
&
Development
Crop Protection
Evolution
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Diversified into pharmaceuticalsbusiness by acquiring Panoliplant from Novartis (formerlySandoz) and drug manufacturingplant from Wintac (formerlyRecon) in Bangalore
Pharmaceuticals
Commenced operations with aplant in Mahad.
Second Plant commissioned inTaloja along with Merck, USA
Crop Protection
Established R&D center in Puneto focus on R&D and augmentpharmaceuticals and cropprotection processes
R&D
Timeline
6
Year Milestones1988 Hikal is incorporated
1991 First Manufacturing site at Mahad begins operations - Signed a long term supply agreement with Hoescht India
1995 Signed a long term manufacturing and supply agreement with Merck, U.S., for a large volume Agvet Active Ingredient
1997 Manufacturing of the Active Ingredient for Merck begins at Taloja site
2000 Hikal acquires manufacturing site from Novartis in Panoli, Gujarat
2001 Acquired R&D and Manufacturing site in Bangalore. Hikal enters the Pharmaceutical business
2002 First Pharmaceutical API patent for non infringing process filed in the U.S.
2003 First new API plant commissioned at Bangalore. Multi-purpose Pharmaceutical intermediate plant commissioned at Panoli.
2005Hikal Scientific Advisory Board formed
Signed long term supply agreement with a multinational Crop Protection company
2006 Signed Long term supply contract with global innovator company for commercial supply of API's
2007 Signed long term contract API manufacturing supply agreement with a leading Animal health company
2008 IFC (World Bank) invests 8.27% equity into the company.
2009Acoris (Research & Development Centre) becomes operational
Signed Long term supply contract for an on patent molecule with a global crop protection innovator company.
2012 Hikal wins Aditya Birla Award for "Best Responsible Care Company" in India
2013 Signed a long term supply agreement for human health products with a global biopharmaceutical company
2014 Pharmaceutical Sites, Panoli & Bangalore received EU GMP Approval
2015New Development & Launch Plant in Bangalore successfully commision for new products from the Pharmaceuitcal Division
Company successfully commissioned Co generation Plant and Biomass boilers at all sites as part of its sustainability program
Global Regulatory Compliances
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Regulatory Milestones
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2 0 0 8
2 0 0 4
2 0 1 1
2 0 1 3
2 0 1 2
2 0 1 4
Second successful US FDA Audit of Bangalore facility
US FDA approval of Bangalore Pharmaceutical manufacturing site
Panoli certified by the US FDAPanoli & Bangalore sites receive PMDA approval
Bangalore clears its 3rd successful US FDA audit
Panoli & Bangalore PharmaSites are EU Audited
Successfully completed EDQM (European Directorate for Quality of Medicines) Audit at Bangalore site4th Successful US FDA audit for Bangalore facility
Board of Directors
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Baba KalyaniJai Hiremath
Chairman & MDSameer Hiremath
President & Joint MD
Prakash Mehta
Dr. Wolfgang Welter
Sugandha Hiremath Kannan Unni Shivkumar Kheny Amit Kalyani
Prof. Axel Kleemann
Management Team
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Jai Hiremath
Chairman & MD
Sameer Hiremath
President & Joint MD
Kumar Inamdar
Crop Protection
Sham Wahalekar
FinanceAnish Swadi
BD& Strategy
Kumaar Priyaranjan
HR
Manoj Mehrotra
Pharmaceuticals
Dr. Sudhir Nambiar
R&D
Scientific Advisory Board
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He is B.Sc. (Hons) in Chemistry from Loyola College, Madras, and Ph.D. from the University of Madras. He is a postdoctoral Fellow from Wayne State University, California Institute of Technology, Pasadena and Zurich University, Switzerland.
He has held various positions as Head, Medicinal Chemistry, Ciba Research Center; Director, R&D of Searle India, among others.
Bhatnagar Prize in Chemistry and Lifetime Research Award from the Chemical
Research Society of India. Dr. K. Nagarajan spearheads the scientific efforts at Hikal.
He is a Ph.D. in Chemistry from the Johann Wolfgang Goethe University, Frankfurt am Main, where he is the Honorary Professor of Chemistry.
Prof. Kleemann is the Chairman of the Board of Directors of Protagen AG and a member of the Board of Directors of several non-listed and listed biotech and fine chemical companies
Co-author of the standard reference book, 'Pharmaceutical Substances'.
01He holds a D.Sc. from the University of Marseilles, France; Ph.D. In Organic Chemistry from Pune University -National Chemical Laboratory; and a Ph.D. from Michigan State University and Ohio State University USA.
He is a National Research Professor, Eli Lilly Chair, School of Chemistry at the University of Hyderabad and a Bhatnagar Fellow
Padma Shri in 2000 by the President of India
Chevalier de la Légion d'Honneur
Fellow of the Royal Society and a member of the Scientific Advisory Committee to the Prime Minister of India
Dr. Goverdhan
Mehta
Prof.
K Nagarajan
Prof. Axel Kleemann
Focused Strategy
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Develop Own Portfolio
• Develop own portfolio of products as next wave of Hikal growth
• Life cycle extension
Aggressive Growth
• Aggressive growth in Pharmaceuticals , Animal Health & Crop Protection
• Support NCE & Gx Molecules Serving a large range of Customers
To be a leading reliable & high quality sustainable CDMO player globally
Strategy
Relationships
Positive track record with Existing Customers to expand the Relationships and Target New Customers
Value Chain
Lead molecule identified
LaunchExpiry
Discovery research Pre launch
On patent growing
Off patent matureOff patent
Discovery Development Full scale Manufacturing
Research biology & Chemistry
Pre-Clinc
PhI
PhII a
PhII b
PhIII
Contract Development Contract Manufacturing
Hikal R&D Services Hikal Manufacturing Services
Expertise in Custom Synthesis and Contract Research with capabilities scaling up from Gram
to Kilo and Ton level of Production
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Contract Development & Manufacturing
Physical Product Development Varying degrees of ongoing improvements
ManufacturingVarying degrees of pre-transfer involvement
Pre-developmentEarly
development
Phase II Phase IIILaunch
+4 yearsLifecycle
ExtensionPhase I
Process Development & New Product Development
Commercial ManufacturingKgs - Tons
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Hikal’s Business Model is to provide Services and Support across the Value Chain
Hikal – Locations
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Research &
Development
Pharmaceuticals Crop Protection
Pune
Mahad
Bangalore
Taloja
Panoli
Panoli
Manufacturing Capabilities
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2009
2003
2001
2000
1997
1991
First Manufacturing site at Mahad begins operations - Signed a long term supply agreement with Hoescht India
Mahad
Manufacturing of the Active Ingredient for Merck begins at Taloja site
Taloja
Acquires manufacturing site from Novartis in Panoli, Gujarat
Panoli
Acquired R&D and manufacturing site; enters the Pharmaceutical Business
Bangalore
First new API plant commissioned at Bangalore. Multi-purpose pharmaintermediate plant commissioned at Panoli.
Bangalore & Panoli
R&D Center in Pune becomes operational
Pune
Pharmaceuticals
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• Contract Development & Custom Manufacturing (CDMO) projects in Intermediates and APIs
• World’s largest supplier of Gabapentin, API for Neuropathic use
• Developing own Generic Portfolio
• Strong Customer Relationships with Large Global Generic & Innovator Cos.
Overview
USFDA Approved Site - Bangalore
USFDA Approved Site - PanoliR&D, Contract, cGMP Kilo Lab - Pune
Products: Bulk Drug Intermediates
Accreditations: US FDA certified, PMDA (Japan)
ISO 9001, ISO 14001, OHSAS 18001
Manufactures cGMP Intermediates & Regulatory starting Materials.
Audited & Approved for supply by Innovator Companies
Expanded capacity for key starting raw materials
Evaluating further expansion plans which would de-risk our Bangalore site for the manufacture of final APIs
Pharmaceuticals – Facility Overview
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Jigani,
Bangalore
Panoli,
Gujarat
Products : API’s & Bulk Drug Intermediates
Accreditations: USFDA, KFDA, TGA, PMDA (Japan) & ISO 9001, ISO 14001, OHSAS 18001
Offers scale up capabilities and can provide validation and launch quantities under cGMP conditions
Audited frequently by Innovator companies from US, European and Japan
Debottlenecking at two API blocks, Further scope of debottlenecking in future
Installing a large bio-mass boiler & setting up a co-generation plant
Existing Contracts
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European
Innovator
Client
Long-term contract manufacturing agreements with a European innovator client to commercially manufacture molecules gaining momentum
Strong Cost Position is offered by us and the molecule is expected to grow further
Dialogues are on for several other projects which have been evaluated for commercial manufacturing
USA –based
Food Ingredient
Client
The specialized product continues to do well
Several approvals are expected in 2015-16 for new clients using the product manufactured at our facilities.
A dedicated manufacturing line has been commissioned for this product and volumes are expected to grow in the near future
Business in
Japan Track record of meeting quality requirements in Japan established Several contract manufacturing opportunities in discussion for intermediates and
advanced intermediates Several products that have come through R&D have also progressed to the semi-
commercial stage Commercial manufacturing business to expand over the next few years in Japan
Future Strategy
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Existing
ContractsNew
Relationships
Identification
of New APIs
Generic
Products
• Start with a specific product
and expand horizontally
• European Innovator
• USA based Food Ingredient
• Japan - Several contract
manufacturing opportunities
Existing Contracts New Relationships
• Plans to file 4-5 DMFs per year
• Products selected are a
combination of :
Clients' interest
Niche molecules where we
have a distinct technology
advantage to gain a
considerable market share
• Pursuing allied niche opportunities
in steroids and oncology
Identifying New APIs
• Gain market share in key APIs
• Increased the volumes of our
exclusive contract manufacturing
clients for their molecules
Generic Products
• Added New innovator
and biotech customers
for early stage molecules
for contract development
• Projects in various stages
of clinical trials
• Approval process is
lengthy & uncertain
Crop Protection
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• Custom Synthesis and Contract manufacturing of Agrochemicals, Intermediates and Specialty Chemicals
• World’s largest supplier of Thiabendazole (TBZ)
• On Patent Molecule Manufacturer
• Strong Relationships with Global Leading Agrochemical Companies
• Strong Japanese Presence
Overview
Agro Chemical Facility - Taloja
Agro Chemical Plant - PanoliControl Room - Taloja
Crop Protection – Facility Overview
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Taloja,
MH
Mahad,
MH
Products: Crop Protection AIs & Intermediates
Accreditations : ISO 9001, ISO 14001, OHSAS 18001 & ISO 17025 (GLP)
Manufactures Fungicides, Insecticides and Intermediates.
The site manufactures on patent active ingredients for innovator companies
Products: Crop Protection AIs & Intermediates
Accreditations: ISO 9001, ISO 14001, OHSAS 18001
Manufactures Intermediates
Audited frequently by several Fine Chemical and Multinational Companies
Key Relationships
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The product is used on grapes,
potatoes, tobacco and vegetables.
The wide use of this product would help the molecule
to grow over several years
Product
exclusively for
Innovator
Client
Thiabendazole
Versatile product used to control mold and other
diseases in fruits and vegetables caused due to
fungi, as an anti-parasitic to
control roundworms and
in materials protection
On-Patent
New
Generation
Product
Fungicide Exclusively
manufacture for a global innovator
used on vegetables, potatoes &
Specialty crops
It is receiving additional market approvals thereby increasing volumes
Fully commercialized in 2013 and volumes
are expected to grow in the years to
come as registrations come
through for countries around
the world
On – Patent
Key
Advanced
Intermediate
Product for
Japanese
Innovator
Successfully scaled up and
provided commercial
quantities for a product
Pilot Plant quantities were
completed for an additional product
- under patent
Successfully completed the lab
trials of an Intermediate
Final stages to manufacture pilot
plant batches which will
determine the success
Innovator
Clients
Blockbuster
Product
Future Strategy
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Diversifying
Products &
Clients Proprietary
Products
Client
Relationships
Capacity
Expansion
• Several projects have been
completed on development
and pilot plant level
• Clients - Japanese,
European and mid-size
Specialty Chemical
Companies
• Products - Advanced
Intermediates to final
Actives and are Herbicides,
Fungicides and Insecticides
Diversifying Products & Clients Proprietary Products
• Target existing clients for
additional molecules in their
portfolio
• Focusing on commercializing new
molecules for several clients in
existing & new markets
• Select new clients based on
chemistries to execute on a
commercial scale and in-house
technologies developed
Existing Client Relationships
• Streamlined some of our large
manufacturing facilities by
debottlenecking plants and
improving existing processes
through the support of our R&D
Capacity Expansion
• Started manufacturing &
selling our own products
developed by our R&D such
as Quinalphos, Diuron and
3,5DCA
Research & Development Update
Deploying R&D - Internal pipeline
Developed processes for several molecules using enzyme technology
Validated two ‘green’ enzymic process technologies for major API products
3 patents for novel routes to APIs filed
Several significant Phase I and Phase II projects in the development pipeline
Several animal health projects in the pipeline
First manufacturing potential for a project in the flavor and fragrance sector
Future Plans
File 4-5 DMF’s every year
Continue to generate our own IP through Process Patents
Investments in R&D
Research Molecules in various stages of Phase II & III - Building a pipeline for future
commercial supplies
R&D – Benefits Accrued
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102133
318 311345
0
50
100
150
200
250
300
350
3%
4%
2%
1%
5%
0%
2%
4%
2%
FY11
5%
FY15FY14FY12 FY13
4%R&D (Rs. mn)
As % to Sales
Our R & D Efforts
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• Validated an API product using enzymatic technology developed by our R&D with commercial manufacturing starting soon
• Some of the products coming off-patent shortly and are under various stages of development are Sitagliptin, Dabigatran, Lacosamide, Olmesartan and Darunavir
• Majority of projects are from innovator clients in Japan and Europe
• Commercialized an insecticide for an Innovator Company
• Completed process development for an on-patent herbicide for another Innovator Client
• Completed the first pilot plant campaign for an intermediate of a non-regulatory starting material used for an oncology product under development
– second pilot plant trials are under discussion with the same biotech company
• Process development and two pilot plant trials for a regulatory starting material used in the treatment of ventricular systolic heart failure has been completed
• Process development has been completed for an intermediate in Phase III trials for a Japanese innovator company used for treatment of chronic constipation
• Completed development of a topical parasitic used for dogs and cats & a veterinary medication to kill external parasites for pets for a Mid sized European Company
• Completed the process development & first pilot plant campaign for a regulatory starting material used in oral flea and tick treatment for dogs
• Steroid development
– Two products used on livestock to increase muscle growth and appetite and a synthetic opioidanalgesic used in cats and dogs are in late stage development for which client is already secured
R&D – Facility Overview
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Pune,
MH Provides process research of APIs and
intermediates involving multi-step synthesis
Successful track record in developing non-infringing processes and scaling up from lab to kilo to commercialization
Supports clients with:
Route Scouting
Contract Research & Custom synthesis
Process Development & scale Up
cGMP Contract Manufacturing
R&D Facility offers :
Troubleshooting support
Synthesis of Intermediates and APIs
Process Development
Research & Development Expertise
Activities R&D Pune MahadBangalore
ManufacturingPanoli Taloja
Drug Discovery Support
Analytical method Development
Process Research
Process Development
Process Improvement
Kilogram Laboratories
Pilot Plants
cGMP compliance
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Facilities ensures seamless scale up from Lab to Commercialization
Intellectual Capital
We are creating a Sustainable Culture with the help of our team of Experienced
Scientists and Specialists
No. of Employees 1,164
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Qualification DepartmentPh. D
2%
MSc22%
Engineers12%
Graduates30%
Others34%
Corporate Office
7%
Mahad11%
Taloja22%
Panoli10%
Jigani36%
Bangaluru1%
Pune13%
Several
Other
Molecules
Japanese
Client
Animal
Health
API
Chemical
Development
Animal Health – A Natural Progression
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Exclusively contract manufactured for a leading US innovator company
Pursuing allied niche opportunities in steroids
Flexible
Manufacturing
Facilities
Existing
Commercial
Products
Completed the kilo lab trials of a product which we expect to validate in the next financial year
An alternative economical route was developed for an additional product
US Based
Client
Completed the pilot trials of another Animal Health product for a leading Japanese company
Products are a mix of molecules coming off- patent and new generation molecules
Lab work is in process of completion and awaiting scale up to the semi-commercial stages
Key Strengths
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Hybrid Business Model
Ever Growing Product Portfolio
Established Relations with Clients
New Experienced Management Team
Regulatory Compliances
Strong Research & Development
Growth Drivers
Blocks Built
Asset Creation
Relationships
Research & Development
Growth Drivers
Expansion of Product Portfolio
Increase in Volumes
Margin Enhancement
Uniquely positioned to become an integral part of
Pharmaceutical and Crop Protection Supply Chain
32
Operational Highlights
Standalone Revenues Standalone EBITDA
We expect growth in both our divisions with increased volumes from our
existing products which provides sustainability to Revenues
33
9,2578,7198,292
6,6046,942
4,9355,360
4,780
3,120
FY16
+15%
FY14FY10 FY13FY11 FY15FY12FY09FY08
1,8411,8831,9101,884
1,283
1,790
1,326
830
1,809
FY08 FY09 FY16FY13FY12FY11FY10 FY14
+10%
FY15
Rs. Million
Operational Highlights
Pharmaceuticals Revenue Crop Protection Revenue
Higher EBITDA Margin on account of Higher Margin Products, Quality Conscious Customers
and Efficient Operations
34
5,6915,375
4,754
3,716
4,477
3,2103,570
2,759
1,540
FY11 FY14FY12 FY15FY13
+18%
FY10FY08 FY16FY09
3,5653,344
3,538
2,888
2,465
1,7341,7912,021
1,580
FY12FY09 FY13FY11FY10FY08
+11%
FY15FY14 FY16
Rs. Million
Capital Expenditure
Rs. Million
Major Asset Creation Completed. This gives us an ability to scale-up operations rapidly by
making small incremental investments
Cashflow from Operations Capital Expenditure
35
1,023
1,546
613
1,367
1,132
1,256
1,029
338
FY10FY09FY08 FY11 FY14FY13FY12 FY15
645521457
701757
519
2,884
1,177
FY14FY08 FY11FY10 FY13FY09 FY12 FY15
Standalone Profit & Loss
36
Rs. Million Q4 FY2016 Q4 FY2015 Y-o-Y Q3 FY2016 Q-o-Q
Net Sales 2898 2,135 36% 2,404 20%
Expenditure 2302 1,685 1,945
EBITDA 586 450 32% 459 30%
Margin 20.6% 21.1% 19.11%
Other Income 3.3 2 8
Depreciation 174 184 170
Finance Costs 120 91 124
Exceptional Loss/ (Income) 13 0 16
PBT 293 178 65% 157 86%
Tax 70 76 33
Net Profit 222 102 118% 124 79%
Margin 7.7% 4.8% 5.16%
Standalone Profit & Loss
37
Rs. Million FY2016 FY2015 Y-o-Y
Net Sales 9,257 8,719 7%
Expenditure 7,447 6,893
EBITDA 1,809 1,825 -1%
Margin 19.5% 20.9%
Other Income 18 16
Depreciation 673 642
Finance Costs 622 600
PBT 533 599 -11%
Tax 120 194
Net Profit 413 405 2%
Margin 4.5% 4.6%
Standalone Balance Sheet
38
Rs. Million Mar-16 Mar-15
Shareholder’s Fund 5,649 5,335
Share Capital 164 164
Reserves & Surplus 5,485 5,170
Non-Current liabilities 3,369 2,417
Long Term Borrowings 2,966 2,014
Deferred Tax Liabilities 301 285
Long Term Provisions 102 117
Current Liabilities 3743 5,178
Short Term Borrowings 1,719 2,310
Trade Payables 1,279 1,371
Other Current Liabilities 745 1,497
Total Liabilities 12,761 12,929
Rs. Million Mar-16 Mar-15
Non-Current assets 8,089 7,921
Fixed Assets 6,893 7,010
Long-Term Loans & Advances 1,165 879
Non-Current Investments 31 31
Deferred Tax Assets 0 0
Current assets 4,672 5,009
Inventories 2,911 3,140
Trade Receivables 1,123 1,280
Cash and Bank Balances 192 137
Short-Term Loans and Advances
443 409
Other Current Assets 2.7 43
Total Assets 12,761 12,929
4.92
7.77
3.07
6.58
5.39
7.32
5.03
1.000.900.50
1.201.201.60
1.00
FY12FY10 FY11 FY16FY14* FY15FY13
Annual Dividend Payout
Board approves Total Dividend of Rs. 1 per share for Face Value of Rs. 2 in FY2016
22% 18%22%Dividend Payout
16% 12%
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EPS DPS
20% 20%
* - Includes exceptional income of Rs. 2.75 per share (Rs 226 mn net of tax received from disposal of shares of HikalEmployee Welfare Trust A&B)
Company : Investor Relations Advisors :
Hikal LimitedCIN: L24200MH1988PTC048028
Mr. Sham V. Wahalekar
www.hikal.com
Strategic Growth Advisors Pvt. Ltd.CIN: U74140MH2010PTC204285
Ms. Payal Dave / Mr. Jigar Kavaiya+91-9819916314 / [email protected] / [email protected]
www.sgapl.net
For further information, please contact:
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